A leading business watchdog says corruption increased last year in Bulgaria, despite its claims to be beating the problem ahead of planned EU accession next January.The Centre for the Study of Democracy (CSD) gave its damning verdict on Bulgaria as the EU told neighbouring Romania that it could not relax its own anti-corruption drive if it also hoped to join the 25-nation bloc at the start of 2007.After Bulgaria reduced corruption from 1998-2004, "over the past year and a half . . . alarming indications of increased numbers of corrupt transactions have been identified", said the CSD, which is partly funded by the EU and the United States."The institutionalisation of political corruption makes it easier for criminal interests to capture state institutions, thus allowing organised crime to enter the legal economy of Bulgaria and the EU with impunity," the report alleged.The CSD said that in 2005, Bulgarian political parties siphoned as much as EUR190 million from the state, by granting contracts and financial breaks to firms that later paid them back through party financing and other means.These "friendly circles" of parties and companies were allowing organised crime gangs to influence politics, launder money and control key sectors of the economy.Analysts say Bulgaria is riddled with corruption at all levels of politics, business and the judiciary, and that gangland figures often fall prey to highly public contract "hits".But the CSD said the government's claims to be cracking down on mafia bosses only masked a "reluctance and incapability" to crush corruption, noting in its report that not a single high-level official had been convicted for shady dealings.Many observers believe that Bulgaria has slipped behind Romania in preparing for EU membership.In the last six months, Romanian justice minister Monica Macovei and her new anti-corruption prosecutors have moved against many powerful businessmen and politicians.Her most prominent target so far is Adrian Nastase, a slick former prime minister who was forced to resign as parliamentary speaker last week after being indicted on corruption charges related to property deals in an exclusive part of the capital, Bucharest.A former minister in Mr Nastase's government was also charged with bribe-taking yesterday. Serban Mihailescu is accused of accepting 10 hunting rifles worth almost EUR8,000 in exchange for naming Fanel Pavalache as a government adviser. Mr Pavalache is currently serving a six-year prison sentence after a separate corruption case.The indictment of Mr Nastase was a victory for President Traian Basescu, who beat the former prime minister in 2004 elections to break the stranglehold of the former communists on Romanian politics.They still have great influence in the country's upper house of parliament and constitutional court, however, allowing them to slow down or block judicial reforms that the EU calls vital to Romania's bid for EU accession in January."We want to see Romania in the EU in January 2007," insisted Austrian foreign minister Hans Winkler, whose country holds the EU's rotating presidency, after talks with his Romanian counterpart this week, "but it needs to run the final mile."Romania and Bulgaria fear their accession may be postponed for a year because of scepticism towards greater EU enlargement in countries such as France and The Netherlands, which rejected the union's draft constitution last year."If there is a political decision to delay membership just to show that the EU is very tough towards new members, it is not a good idea," said Bulgarian foreign minister Ivailo Kalfin."That would be very discouraging to the institutions of our two countries and the EU would have two new members much less motivated one year later."